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NAAA: AUCTION INDUSTRY REPORT ALSO IIADA Wants Your Opinion PLUS The CarLawyer

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BIODIESEL CLASSES Cars.comEDUCATION Extends Online Chat

ThereTO are MOBILE some misconceptions IowaDEALERS Biodiesel Board. along with a meal, the workshop will upDEVICES about TO HELP CONNECT WITH SHOPPERS biodiesel fuel. It is a clean-burning alterThis course is in the approval process date you about biodiesel and its clean pernative fuel, produced from domestic, thesaid National Automotive Techniciansof formance diesel engines. Cars.com dealers using therecom-withson Dealersininterested in adding chat funche appreciates the immediacy newable resources. Biodiesel is simple Education Foundation (NATEF) to qualify Iowa’s 15 community colleges in partpany’s free online chat functionality online advertising packchat. "It’s definitely been a plus for our tionality to their to use,can biodegradable, nontoxic and ASEIt’s Certified Iowa Biodiesel Board are ofnow communicate withes-cus-as an age canwith contact their sales representative. store. a betterTraining way for Provider customersofto nership sentially free offrom sulfurtheir and aromatics. The Continuing Education FREE workshops coming spring. tomers Internet-enabled us to respond. They fering To help dealership sales this teams incorporate reach usAutomotive live and for Service community colleges are offering a 3-hour of this opportunity to atThe company added on-(CASE). smartphones. get immediate access to the information Take chat advantage into their sales process, Cars.com education class in cooperation with the areand offered thereally evenings at NO COST. the-go access to its chat platform to cre- Classes they need, I think in that’s key.” tend presented “Chat Up Your Inventory: ate new opportunities for dealers to Amason, who added online chat about Leverage Chat to Reach In-Market Shopconnect with buyers. a year ago, reported an increase in busi- pers and Win Sales" through its Dealer“Mobile chat allows salespeople to be ness after he began testing the new mo- ADvantage Live webinar series. A more responsive to shoppers' inquiries, bile chat enhancement. “I was able to recording of the free workshop is availE B R stepped U A R Yaway 2 2from - their D E S accept M O Itwo N Echats S Alast R E month A C Othat M IMwould U N I Table Y CatOhttp://dealers.cars.com/live. LLEGE even if F they've desk," said Michael Page, Cars.com vice not have been available for if it weren't for F E B R U A R Y 2 3 - I N D I A N H I L L S C O M M U N I T Y C O L Cars.com L E G E launched online chat for its president of advertising products. "Deal- mobile chat. I know this resulted in two customers in January 2009 at no addiers can respond hard, Mat Ashoppers' R C H 1convenience, 0 - K I R Ksales. W O They O D were C O Mtwo MU N I Ttrackable Y C O L L tional E G Echarge as a way to help dealers congiving them the information they need to sales," he said. “In my experience, ap- nect with more online shoppers. The take the next step live pointment M Atoward R C Ha purchase. 1 6 - With I O WA W E S rates T E Rare N higher C O Mwith MU N Ichat T Y Ctechnology O L L E G Eis delivered through a partthe popularity of smartphones in the store, compared to traditional email and phone nership with Contact At Once! Mobile Mthis A Rcapability C H 2 4to- enhance N O Rappointments. T H E A S T IThere O WA CO U N I T chat Y Ccapabilities O L L E G E are -CA L M available AR dealers can use seems to M be M a better made as their customer service and sell more cars." quality interaction because of minimal part of a renewed agreement, also an A PChevrolet R I L 1 9Dealership - D E S delay M O in I Nresponse." E S A R E A C O M M U N I Tnounced Y C O Ltoday, L E Gbetween E At Buster Miles the two compain Heflin, Ala., sales consultant Phil Amanies.

>>

2011

View the Biodiesel Education Calendar at www.onesourcetraining.com

IIADA APPROVED MEMBER BENEFIT PROVIDERS WILSON DISTRIBUTOR SERVICE IIADA DEALER CAP FORMS Car Brite Products Forms, Detail Supplies, Equipment & More Jason & Lisa Goody 105 N McCoy Mt. Pleasant IA 52641 Phone: 800-634-0974 Fax: 319-385-2927 E-mail: jasonwds@lisco.com Website: www.wds-usa.com AUTO OWNERS INSURANCE 10% DISCOUNT TO ALL IIADA MEMBERS Corcoran & Associates, Inc. Mick and Teresa Corcoran 2525 E. Euclid, Suite 102 Des Moines, Iowa 50317 Phone: 515-262-3141 Fax: 515-262-3086 Toll Free: 877-518-4051 E-mail: teresa@corcoranandassoc.com ASSOCIATIONS MARKETING GROUP INC Health Insurance Jesse Patton 1112 Maple Street West Des Moines, Iowa 50265 Toll Free: 800-798-6772 Phone: 515-270-8178 Fax: 515-270-0398 E-mail: lpatton@amgi-dsm.com CYCLONE AUTOMOTIVE TRAINING INC. F&I Training, Sales Training, Service Contracts, Rob Miller and Chris Hochstein 515 N Jefferson Way Ste H Indianola IA 50125 Phone: 515-962-0099 or 515-962-0100 Fax: 515-961-8400 Rob: 515-205-5900 cell Chris: 515-205-5800 cell E-mail: cycloneautomotive@cycloneautomotive.com S & C AUTOMOTIVE, INC. Service Contracts, GAP, Aftermarket Products Sales & F & I Training thru Star Training Group 3828-70th Street Urbandale, Iowa 50322 515-276-9622 800-776-9622 515-276-8472 (fax) e-mail: dougeckhart1@yahoo.com website: www.sandcsales.com Contact: Doug Eckhart

NADA BOOKS Official Used Car Guides, Subscription Discounts, Annual Subscription through IIADA, Save $$ Contact IIADA at Phone: 641-755-4177 E-mail: iiada@netins.net REYNOLDS & REYNOLDS INC. Dealer Bonds Long Term Care Insurance Various types of insurance Contact: Dean M Clark 300 Walnut Street Ste 200 Des Moines IA 50309 Phone: 515-243-1724 Toll Free: 800-767-1724 Fax: 515-243-6664 E-mail: d.m.clark@reynolds-reynolds.com AUTOJINI.COM Websites for Dealers Contact: Syed Azam 310 Main Street Ste 201 Ames IA 50010 Phone: 515-232-2024 E-mail: syed@octadyne.com ZURICH Garage Keepers, Property, Garage Liability Dealer Bonds 7045 College Blvd. Overland Park, Kansas 66211 Jeff Severino, Regional Sales Manager Phone: 913-664-3944 Fax: 913-498-5521 Toll Free: 800-840-8842, Ext. 3944 GLOBE ACCEPTANCE INC Sub-prime Lender Contact: Sarah Grisham P.O. Box 65400 West Des Moines, Iowa 50265 Phone: 515-225-9067 E-mail: globeaccepts@globeacceptance.com Website: www.GlobeAcceptance.com SECURITY AUTO LOANS (SAL) Sub-prime Lender Contact: Scott Erikson/Joe Ruhland 4900 Highway 169 N., Suite 205 New Hope, Minnesota 55428 P: 763-559-5892 F: 763-559-7549 website: www.securityal.com Scott: 402-639-0664 e-mail:serikson@adgtoday.com Joe: 612-804-0720 e-mail: joe@autofaqs.biz

ADVANCED BUSINESS PRODUCTS, INC. Printing, Promotional Products, & Wearables Contact: Scott Jayne PO Box 71547 Des Moines IA 50325 Phone: 515-225-6343 Toll Free: 888-464-2274 Fax: 515-225-6510 Toll Free Fax: 877-987-3514 Website: www.go4abpi.com

GOLDSTAR GPS 2093 20th Ave. S.E. DYERSVILLE, IOWA 52040 PHONE: 866-655-8825 Ext. 120 Fax: 866-655-8285 Contact: Mark VanDyke e-mail: markv@goldstargps.com Website: www.goldstargps.com

CORCORAN & ASSOCIATES INC. Various Types of Insurance Contact: Mick Corcoran, Janet Solberg or Donna Torkelson 18 – 2nd Street, N.E. Mason City, Iowa 50401 Phone: 866-494-1814 Fax: 641-494-1819 E-mail: donna@corcoranandassoc.com

MICROBILT CORPORATION Credit Reports From Equifax, Experian and Trans Union; Employment Background Screening; Driver’s License & Motor Vehicle Searches 111 Butler Street Lexington, South Carolina 29072 Contact: Randy Mosteller 866-277-7707 randy_mosteller@microbilt.com www.microbilt.com

INNOVATIVE DEALER SERVICES, INC. Dealer Software Management Systems P.O. Box 23189 Shawnee, Kansas 66283 913-312-7344 – Ext. 11 Fax: 810-821-1718 Website: innovativedealer.com Contact: Deems Peterson, Sales Manager E-mail: dpeterson@innovativedealer.com

AUTOMOTIVE DEVELOPMENT GROUP, LLC Dealer Compliance Education, F & I Compliance and Training, Service Contracts, GAP and Protective Coatings Contact: Scott Erikson 100 Prairie Center Drive, Suite 200 Eden Prairie, Minnesota 55344 Scott: (402) 639-0664 serikson@adgtoday.com

FOLLOW-UP PLUS “Customers for Life” Repeat Sales, Referrals & Customer Loyalty Contact: Terry & Sue Newell P.O. Box 294 Carthage IL 62321 Ph: 888-353-2668 Fax: 217-357-9076 E-mail: tlnewell@frontienet.net

MONSTERLOT.NET Automotive Development Group, LLC Dealer to Dealer Inventory /Trading and sharing Free Unlimited Web Access www.MonsterLot.net E-mail: info@monsterlot.net Contact: Scott Erikson 402-639-0664

FRAZER COMPUTING, INC. 2564 W. Main St., P.O. Box 569 Canton, New York 13617 Phone: 888-963-5369 Fax: 888-963-3366 E-mail: ucd@FrazerComputing.com National Rep: Mike Frazer Dealer Management Software for Used Car Dealers FRAZER COMPUTING, INC. Contact: Scott Erikson, Iowa Rep 100 Prairie Center Drive, Suite 200 Eden Prairie, Minnesota 55344 Scott Erikson: 402-639-0664 serikson@adgtoday.com

JR 5 TRANSPORTATION Transport Services John Robinson, President 1109 S.W. 63rd Street Des Moines, Iowa 50312 515-822-3447 CHASE CUSTOM FINANCE Chase Auto Finance 1800 S. Naperville Road Wheaton, Illinois 60189 Christopher Compton Assistant Vice-President 515-720-9440 Christopher.e.compton@jpmchase.com SMARTAUCTION Matthew Mohler 4300 SW Cambridge Avenue Topeka, Kansas 66610 785-249-4166 matthew.mohler@ally.com

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WHAT DO YOU THINK? 1. Iowa Code 321.50 states the holder of a security interest, discharged by payment, who fails to release the security interest within fifteen (15) days after being requested in writing to do so shall forfeit to the person making the payment the sum of $25. DO YOU THINK LIEN HOLDERS NEED TO BE MORE PROMPT IN SENDING TITLES TO DEALERS/CUSTOMERS AFTER PAY OFFS. YES _________ NO _________ DO YOU THINK PENALTIES SHOULD BE INCREASED? YES ____ NO___ IF YES, WHAT WOULD YOU SUGGEST? ____________ 2. Many states have raised the fees for dealer licenses. Iowa currently is at $70 for the license and $70 for the registration or a total of $140 to obtain an Iowa motor vehicle dealer license. Do you think this fee should be increased? YES ______ NO_____ If yes, what would you suggest? $300 $500 $750 $1,000 OR $_______________ 3. Iowa dealer plates cost $ 40 each. Do you think this fee should be increased? Yes _____ No ______ If yes, what would you suggest dealer plate fees be? $ _________________ 4. Dealer Bonds. Currently those who are licensed motor vehicle dealers in Iowa are required to hold a $ 50,000 surety bond. Do you think this is an adequate amount or should it be increased? Adequate ____ Increase it to ______________ 5. Currently Iowa dealers are required to county plate and register pickups used to tow trailers. This process is inclusive of paying the “fee for new registration” (use tax) on the pickup. Do you think a dealer should be allowed to county plate and register their pickup without paying the use tax for a period of 90 days? YES ___________ NO ______________ 6. Suggestions or comments you would like to make:

PLEASE RETURN TO IIADA, 409 EAST MARKET ST., P.O. BOX 337, PANORA, IOWA 50216, 641-755-4177, E-MAIL IIADA@NETINS.NET, FAX 641-755-3247.

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RENEWAL OF DEALER LICENSES AND PLATES Current dealer licenses and plates expire on Dec. 31, 2010. Any old dealer plates still in use after Dec. 31, 2010, should be destroyed to avoid action by law enforcement.

The DOT Office of Vehicle Services sent renewal notices in September 2010 and is processing dealer license renewal applications. To be guaranteed your new dealer plates, the DOT asked that dealers submit their renewal application early in November. If you do not send in your renewal application you may not receive your new dealer plates by Jan. 1, 2011. HOWEVER, you will be sent temporary dealer plates until your metal plates are sent to you. PLEASE DO NOT USE YOUR NEW METAL DEALER PLATES UNTIL 1/1/2011 AND DESTROY YOUR OLD DEALER PLATES AS THESE ARE NOT VALID AFTER 12/31/10 MOTOR VEHICLE ENFORCEMENT CORNER IOWA DEPARTMENT OF TRANSPORTATION

INTERNET SALES

The use of the Internet has proven an effective way to buy and sell cars both for licensed motor vehicle dealers and for the general public. The Internet will not go away anytime soon and we anticipate a continued increase in the use of the internet for motor vehicle transactions. While the internet is a great tool, it also brings about issues with regard to how licensed dealers use it to offer vehicles for sale. To summarize Iowa law, Iowa Code section 322.3(11) states a licensed dealer shall not sell, offer for sale, display, represent, or advertise they intend to sell vehicles from a location other than their licensed location. Iowa Code section 321.104(2) states a dealer shall not hold or display for sale a motor vehicle without having obtained a title for the vehicle, unless allowed by law. If a licensed dealer has a motor vehicle offered for sale on the Internet, the motor vehicle title must properly show this dealer as the owner. Also, this vehicle can only be physically displayed and offered for sale at the licensed location of the specific dealer who is offering the vehicle for sale on the Internet. Retail brokering and retail consignment selling of motor vehicles is not allowed in Iowa. This applies to all motor vehicle sales including salvage titled vehicles. If you have questions regarding motor vehicle dealer license regulations, please contact the Office of Motor Vehicle Enforcement, Investigative Unit, at 866-908-4636.

NIADA.COM

ALL NEW FOR YOU! NIADA has unveiled a brand new website that’s easy to navigate and offers many new technologically-advanced features for dealer members. Among them:

• The entire NIADA membership roster is now included on the home page via a state map. • All state magazines published by NIADA can now be viewed inclusive of advertisements. The magazines also will be archived on the site. Plus, those same state associations will have direct links from their websites to our site promoting readership of their particular state magazine. To view these magazines go to http:// www.niada.com/state_magazines.php • NIADA National Corporate Partners (NCP) will now have the ability to add a company or product-specific video next to their NCP description. • NIADA’s new dealer social network will be unveiled early 2011.

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National Auto Auction Association Auction Industry Report ECONOMY: SLOWDOWN?

The recovery started strong as businesses rebuilt inventories after slashing them to extremely low levels in anticipation of a worse recession than actually occurred. This is typical during business cycles, as firms do not know how bad things will get and overreact to protect themselves against the worst. Then economic growth slowed as inventories were brought into balance with sales. A slowdown in growth at this stage of the recovery also is fairly typical, as the growth driver moves from inventory building to housing, consumer spending, and business investment.

While consumer spending has not been as robust as in some past recoveries, it has been growing at a modest pace and business investment has been relatively strong. Lack of growth in housing, related to the extreme amount of overbuilding that was a major cause of the recession, has been a significant factor holding this recovery back. In addition, the uncertainty associated with the election, taxes, and health care appears to be limiting employment gains to less than what would be expected with recent real GDP growth. As the uncertainty dissipates after the election and decisions on taxes and health care are made,

we should see a pickup in hiring and a decline in the unemployment rate. If this does not occur, the Federal Reserve is ready to provide more stimulus and, whatever the election results, politicians will act if the unemployment rate stays close to 10 percent. With less uncertainty and the beginning of a true housing recovery next year, we expect real GDP growth to average around 3-4 percent during the next two years. NEW VEHICLE SALES: SALES GAINS CONTINUE!

Third-quarter 2010 new light vehicle sales came in at an annual rate of 11.6 million units, the highest quarterly total in two years. On a year-over-year basis, the third quarter gain was only 0.6 percent above the Cash for Clunkersboosted third-quarter 2009 sales rate. New light vehicle sales have recovered sharply from the 9.5 million rate in the first half of 2009. However, we will not likely see the 16 million rate the industry averaged from 1994 to 2007 until the unemployment rate moves down to around 6 percent (probably not before 2014). USED VEHICLE SALES: SALES FLAT!

Third quarter 2010 used vehicle sales were flat with last year as September sales fell 5.6 percent after being up 3.6 percent in the first half. AUCTION VOLUME: VOLUME WEAK!

Auction volume continued declining in the third quarter at about the same rate as in the first half, as a small gain in dealer consignment was not enough to offset large declines in the fleet/

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3rd quarter

National Auto Auction Association Auction Industry Report lease and manufacturer/factory categories. Since Prices were flat with last year in the third quarter, gross value declined at about the same rate as volume Regions: Third quarter volume in the Northeast was relatively stronger than in the other regions for the second quarter in a row. Unit volume in the Southeast and North Central were both down double-digit in the third quarter. TYPE: Dealer consignment volume was only

up 0.8 percent in the third quarter, the only sales type with an increase in each of the last three quarters. Reflecting weak past new sales, fleet/ lease and manufacturer/factory volume declined in the third quarter by 17.2 percent and 25.5 percent respectively. The improving economy continued to result in reduced repos with a 24 percent decline in the third quarter, after a 32 percent increase in 2009.

Source: AuctionNet from NADA

Auction data come from a number of different sources and may not always appear to be consistent. In order to provide the most useful and up-to-date information about the industry, we utilize data from the most appropriate sources and provide you with the underlying implications. Due to their relatively small size and volatility, certain sales types are not included in the above table.

SEGMENT: Although declining in the third

quarter, CUVs and passenger cars continued to be relatively strong, while other segments were down sharply. AUCTION PRICE: NO INCREASE!

After five quarters of year-to-year increases in the 4-10 percent range, auction prices in the third quarter were flat with last year. Year-to-date auction prices are still up 4.2 percent. The move up in auction and used car prices over the past year has brought the relationship between used and new car prices to a point where buyers see less benefit in buying a used car versus a new car - - putting a cap on used retail and auction price inflation.

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The

C A R L A W Y E R©

Welcome back to our monthly collection of selected legislative and regulatory highlights, and a recap of some of the many auto sale and financing suits we track each month. As September passes into

October, things usually start stirring in Washington, D.C., and in the state capitals. This year is no different… Remember, what we report here is not every recent development, just ones that we think are of particular interest to car dealers - and note this column doesn’t offer legal advice. You need to consult your dealership lawyer with any legal questions. We include items from other states. Why? We want you to be able to see new legal developments and trends. Also, another state’s laws might be a lot like your own state’s laws – if new laws are being enacted there, or AGs or plaintiffs’ lawyers are pursuing particular types of claims, those laws and claims might soon appear in your state. As always, though, there is no substitute for checking with your own lawyer before you rely on anything we report or if you have any questions.

Federal Law

Dodd-Frank News. The Treasury Secretary has announced July 21, 2011, as the designated transfer date for various transitions to the Bureau of Consumer Financial Protection (“BCFP”) under the Dodd-Frank Wall Street Reform and Consumer Protection Act. The designated transfer date will occur exactly a year after President Obama signed Dodd-Frank into law. On the designated transfer date, consumer financial protection functions of several federal agencies, including banking agencies and the Federal Trade Commission will transfer to the bureau, and other provisions of Dodd-Frank take effect. On September 17, President Obama announced the appointment of Elizabeth Warren to serve as assistant to the president and special advisor to the secretary of the Treasury on the BCFP. The Dodd-Frank Act gives the Treasury Department the authority to establish the bureau. In a blog post after the announcement, Warren stated “(t)he new consumer bureau is based on a pretty simple idea: people ought to be able to read their credit card and mortgage contracts and know the deal. They shouldn’t learn about an unfair rule or practice only when it bites them - way too late for them to do anything about it. The new law creates a chance to put a tough cop on the beat and provide real accountability and oversight of the consumer credit market. The time for hiding tricks and traps in the fine print is over. This new bureau is based on the simple idea that if the playing field is level and families can see what’s going on, they will have better tools to make better choices.”

Faxing Can be Dangerous. On September 16, the Federal Communications Commission issued eight forfeiture orders, totaling more than $3 million, against several companies for delivering unsolicited advertisements to the fax machines of others. You might want to put your fax machine under lock and key, unless you just like writing checks to the feds. Looking for Fraud. The FTC also announced on August 31 it is seeking public comment on a planned survey on the prevalence of consumer fraud in the U.S., following two previous surveys conducted in 2003 and 2005. The results will help the agency determine the incidence of consumer fraud and whether the type and frequency of consumer fraud is changing.

State Legislative and Regulatory Developments

Clarifications from the Hawkeye State. The Iowa Transportation Department amended or rescinded various rules concerning vehicle registration and certificates of title, special registration plates, salvage, driver’s privacy protection, and vehicle and travel trailer dealers, manufacturers, distributors and wholesalers to conform to recent legislation, to clarify and streamline procedures, and to clean up and clarify rules. Airbag News from the Ocean State. Rhode Island SB 2514 establishes penalties for fraudulent installation or reinstallation of an airbag in a vehicle and provides for certain requirements and disclosures regarding airbags when a vehicle is manufactured, sold, or in an accident. Plain Talk from the Lone Star State. The Texas Office of Consumer Credit Commissioner made technical corrections to its rules on plain language contract provisions. The OCCC also amended its rules on files and records required for retail sellers collecting installments on retail installment sales contracts to return inadvertently omitted language (two lists concerning payment history information and collection contact history) to the required account record information outlined in §84.708(e)(3)(A). Business Taxes in the Old Dominion. Virginia AG Ken Cuccinelli released an opinion on August 24th concluding that liability for payment of business, professional, and occupational license (“BPOL”) taxes always lies with the persons engaged in businesses, professions, or occupations upon which localities levy the taxes, and not with their customers. Absent an express statutory authorization such as that applying to motor vehicle dealers, no business may pass through to its customers by way of a surcharge the BPOL taxes attributable to the gross receipts generated by sales to those customers without the surcharge also being included in the gross receipts of the business and subjected to the BPOL tax.

Litigation

Debtor Entitled to Seek Statutory Damages and Protection from Deficiency Judgment Under Kansas Law: After a creditor repossessed and sold a buyer’s car for nonpayment, the buyer sued the creditor, claiming it violated the Missouri Commercial Code by failing to provide him with a required notice before the sale, violated the Missouri Merchandising Practices Act, and was liable for conversion. The buyer sought to prohibit the creditor from collecting a deficiency balance, and also sought damages. The creditor moved for summary judgment. The court denied the motion. The creditor argued the buyer could not recover both statutory damages and prohibit the creditor from obtaining a deficiency judgment. The court determined the Kansas Uniform Consumer Credit Code, applicable because the sale took place in Kansas, prohibits a creditor that violates the UCCC from seeking a deficiency judgment, and the UCC provides for statutory damages in certain transactions. The court noted because there is no conflict between those two remedies, both remedies could apply. See Hopkins v. Kansas Teachers Community Credit Union, 2010 U.S. Dist. LEXIS 86947 (W.D. Mo. August 24, 2010). Creditor Must Provide Notice of Reinstatement When Debtor Voluntarily Surrenders Car: An individual voluntarily surrendered two cars to the secured creditor when he could no longer afford the payments. The creditor sent the individual a repossession notice, as required by the Pennsylvania Motor Vehicle Sales Finance Act, but the notice did not contain information about his right to reinstate. The individual filed a class action, claiming the repo notice was insufficient because it did not notify him of his right to reinstate and the creditor misrepresented that he could get the cars back only if he paid the full amount owed. The creditor moved for summary judgment, arguing under the MVSFA, it was not required to notify the individual of his reinstatement rights because he voluntarily surrendered the cars. The court denied the motion, finding the notice requirements under the MVSFA don’t depend on whether the individual’s car was forcefully seized or voluntarily surrendered. See Cosgrove v. Citizens Automobile Finance, Inc., 2010 U.S. Dist. LEXIS 88202 (E.D. Pa. August 26, 2010). Spot Delivery Agreement Nullifies TILA Disclosures: An individual bought a used car and signed a retail installment sale contract and a spot delivery agreement. The spot delivery agreement stated if the dealer was unable to find someone to purchase the RISC within 10 days, then either party could cancel the sale agreement. A few days later, the dealer invited the buyer back to the dealership and told him it was unable to sell the RISC and he would need

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By Thomas B. Hudson and Nicole Frush Munro

to sign a new RISC, with higher payments, if he wanted to keep the car. The buyer signed the new RISC. Thereafter, he sued the dealer, alleging the dealer violated, among other statutes, the Truth in Lending Act, and asked the court to certify the action as a class action. The court certified a class. Both parties moved for summary judgment. The court granted summary judgment to the buyer, deciding the spot delivery agreement nullified the RISC and rendered the TILA disclosures meaningless. The court was disturbed by the fact the spot delivery agreement was a stand-alone agreement, and not incorporated into the RISC itself. See Salvagne v. Fairfield Ford, Inc., 2010 U.S. Dist. LEXIS 85098 (S.D. Ohio August 19, 2010). Car Buyers’ Fraud Claim Against Dealer Negated by Buyer’s Fraud: Car buyers claimed a dealership fraudulently induced them to enter into a contract to buy a second car after they learned the first car they bought had more miles than represented. The contract for the second car had a higher interest rate than the contract for the first car. The dealership counterclaimed for fraud, claiming one of the buyers made up an employment history to boost his or her credit. The jury found the dealership fraudulently induced the buyers to enter into the second contract. The trial court then ruled the buyers engaged in their own fraud, preventing them from recovering on their fraudulent inducement claim. The Court of Appeals of Florida upheld the trial court’s ruling on the fraud in the inducement claim. The evidence showed, and the jury found, the buyers submitted false information on their credit application. The appellate court agreed the trial court could not condone those illegal acts and properly ruled against the buyers on their fraud claim. See Dorestin v. Hollywood Imports, Inc., 2010 Fla. App. LEXIS 12337 (Fla. App. August 11, 2010). So there you have it! Stay legal, and we’ll see you next month.

President’s Letter As we bring an end to 2010 and look forward to 2011, I would like to take this moment to wish everyone a Happy Holiday Season. Whether it

was a good year, average year or an off year, it was a struggle for everyone. With the high auction prices and shorter numbers of units available, it was tough sledding to keep your inventories up and in line with price point marketing. It’s looking like 2011 may be a repeat of 2010, so it means working a little harder and a lot smarter. This means working the auctions, the Internet, and the newspapers in an attempt to purchase inventory for your lot. Make sure you get the customers to give you all the information you can because the right vehicle may show up two hours or two days later. If you don’t have the correct information, you won’t be selling that customer a vehicle. It all goes back to what I learned early in my selling career, if you start right, you will end right. If you start wrong, the outcome will usually be negative. It’s time to roll up our sleeves and get to work. Good luck and happy selling! Doug Livy IIADA President

Tom (thudson@hudco.com) and Nikki (nmunro@hudco.com) are partners in the law firm of Hudson Cook, LLC. Tom is the author of several books, are available at www.counselorlibrary.com. Tom is also the publisher of Spot Delivery®, a monthly legal newsletter for auto dealers, and the Editor in Chief of CARLAW®, a monthly report of legal developments in all states for the auto finance and leasing industry (not to be confused with the book). Nikki is a contributing author to the F&I Legal Desk Book and frequently writes for Spot Delivery. Spot Delivery, CARLAW and the books are produced by CounselorLibrary.com LLC. For information, call 410-865-5411 or visit www.counselorlibrary.com. Copyright CounselorLibrary.com 2010, all rights reserved. Single publication rights only, to the Association. (10/10). HC# 4813-5875-7639.

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11/19/10 12:38 PM


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11/19/10 12:38 PM

Iowa Street Smart  

Iowa Street Smart is produced by the National Independent Automobile Dealers Association (NIADA) exclusively for used vehicle dealers who be...